The most unforgotten thing that happened with foreign affairs included the setting of the setting of the question of the canal across the Isthmus of Panama. Roosevelt had long feared that another power could build a canal through Central America and would then control that vital artery. A U.S-held canal could benefit the U.S in many ways. It would boost U.S and world trade, as well as allow U.S ships to move more swiftly between the Atlantic and Pacific oceans case of military emergency. The Spooner Act of 1902 answered the question of a route, benefiting Panama the most (then part of Colombia). The Colombian senate would not ratify the treaty, then wanting more than $10 million offered as an initial payment.

Roosevelt was extremely mad. He had no respect what so ever for the Colombian politicians and little faith that Panamanians felt loyalty to them. He therefore did not mind if native groups and businessmen revolted against Colombia on November 3, 1903. Three days later the U.S acknowledged the new Panamanian government. Colombian troops were not able to put down the Colombians who were all for the canal because U.S ships were so effective. Plans to build the Panama Canal were started immediately.

Roosevelt thought that his achievement was heroic. He followed every detail while building the canal and visited it in 1906. He defended his actions at all times, but still paid Colombia compensation for its loss.